YouTube might compete with Apple, Amazon by offering third-party video subscription services

YouTube is reportedly thinking over offering third-party subscriptions to users and is planning to the battle to Amazon and Apple. The aim is to keep people in the Google ecosystem and give them an option over Apple TV and Prime Video for content.

According to a Verge report, YouTube is considering giving its customers the option to sign up for a "wide range of subscription-streaming services run by entertainment companies".

This essentially means that YouTube night allow people to purchase subscription to services like HBO, Netflix, CBS etc if they decide to go ahead with this plan.

Also Read: YouTube Premium, YouTube music hit 20 million paid subscribers

This plan is not new. There are many companies doing this already. Amazon and Apple are two of the biggest names in this. Amazon Prime Video subscribers and Apple users can buy these subscriptions online.

Amazon and Apple take a portion of revenue from every sign-up. "By offering a la carte versions of the traditional television bundle that more people are trying to escape and giving customers a way to pay for the subscriptions they want without having to deal with pesky cable contracts and cancellation fees, Amazon and Apple can control a growing portion of a growing customer base," reported The Verge.

Google's interest in a subscription service will also help YouTube's subscription grow. Google CEO Sundar Pichai told investors recently that YouTube has 20 million paid subscribers (over YouTube Premium and YouTube Music) and 2 million subscribers on its internet TV service, YouTube TV.

Also Read: Google Chrome, YouTube to remove 'annoying' video ads in next four months

As per reports, that is a growth of more than 1 million subscribers on YouTube TV in less than a year. "YouTube's various subscription services are a growing business, one that Pichai specifically noted Google is interested in growing," writes Verge.

Also, this a sector Google should be interested in since according to a Nielsen report, nearly 20% of all TV being watched at homes across the US are being consumed via streaming services that are both paid and ad-supported. The same report states that 93% of users are also willing to increase the number of services they pay for.

Being a host to a number of services is important to companies like Apple, Amazon and Roku. This, added to the fact that YouTube has two billion monthly users who are spending hours watching content, there is a case for Google here.

The big issue is there's no guarantee if and when this will take off. Consumers already have easy access to Amazon Channels and are already using Apple products. And if they levy high programming fees it will make the minimum guarantee harder to hit. YouTube, though, has the advantage of being able to lean on its ad revenue ($15 billion in 2019) and Google's larger revenue to offset costs and possible losses.

Also Read: YouTube makes $15 billion in a year, Alphabet CEO Sundar Pichai revealed company's earnings call

The goal is to eventually make profit and that will depend on what services YouTube partners with. One of the main reasons as to why Facebook's subscription video service did not take off, and is now apparently being shut down, is because it partnered with niche apps like CollegeHumor and not big names like HBO.

Also, if users want something like HBO, they can get it through the App Store and Play Store. They can also get it as an add-on with Prime Video. Similarly, something like Hulu Live also allows users to pick up other subscription services as add-ons.

So that's where efficiency and simplicity will come into play. For an Amazon and an Apple, they are already hubs for people's day-to-day content. Amazon Prime Video and Channels work because people are using Amazon to shop and are already paying for an ecosystem. Apple channels everything through the main retail hub that powers content on iPhones/Macs/iPads etc.

If Google goes down this path, we'll have to wait and watch how they plan to do this.